Differences Between the Static Budget and the Flexible Budget Are

question 142

Multiple Choice

Differences between the static budget and the flexible budget are due to _____.

• A)problems of cost control
• B)poor usage of material and labor
• C)a combination of price and material variances
• D)actual activity differing from expected activity levels

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Definitions:

Absorption Costing

A method of accounting that encompasses all costs involved in manufacturing, including direct materials, direct labor, and both variable and fixed manufacturing overhead, as part of a product's cost.

Net Operating Income

The profit a company makes from its core business operations, excluding deductions of interest and taxes.

Net Cash Flow

The amount of cash generated or lost over a specific period, taking into account cash inflows and outflows from operational, investing, and financing activities.

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the level of production, such as factory rent or salaries of production supervisors.